STOCKS
Dow remains stable above 34000 and can remain in the 33500-35000 range for some time. DAX keeps alive the chances of seeing 15700-15800 on the upside before reversing lower. Nikkei is trading near a crucial resistance level of 28500 which will have to be broken to move further higher and avoid a fall back. Shanghai has increased chances of breaking above 3525 and move up further. Sensex and Nifty can test their crucial resistance levels of 50000-50500 and 15000-15100 respectively and has to rise past these levels to become more bullish.
Dow (34327.79, −54.34, -0.16%) remains stable and has dipped slightly yesterday. We retain our view of seeing a range bound move between 33500 and 35000 for some time. As mentioned yesterday, 33500 and 33000 are crucial supports. The outlook will turn bearish only on a fall below 33000.
DAX (15396.62, −20.02, -0.13%) hovers around 15400 and keeps alive the chances of seeing 15700-15800 on the upside first. A further rise above 15800 is less likely and we can expect DAX to reverse lower towards 15200 thereafter.
Nikkei (28401.72, +576.89, +2.07%) has risen back sharply above 28000 and is hovering just below the crucial resistance level of 28500. A strong break above 28500 is needed to become bullish again. While below 28500, the view remains bearish to see a fall towards 27000-26000. The price action near 28500 today will need a close watch.
Shanghai (3517.42, −0.20, -0.01%) hovers near the crucial level of 3525. The price action over the last few days leaves the chances high for Shanghai to break 3525 and rise to 3600-3650. Inability to breach 3525 and a sharp fall below 3500 can bring it back into the 3350-3500 range. We will have to wait and watch.
Nifty (14923.15, +245.35, +1.67%) and Sensex (49580.73, +848.18, +1.74%) have risen sharply above 14800 and 49000 respectively. 15000-15100 on Nifty and 50000-50500 on Sensex are crucial resistance levels to watch. A strong break above these resistances is needed to become more bullish and also to avoid a fall-back again. The price action today will need a close watch.
COMMODITIES
Crude prices have moved up well and need to break above respective resistances to keep the upside momentum alive and test higher levels. Else a decline from immediate resistances would lead to a dip in the near term. Watch price action near immediate resistances over the next 1-2 sessions. Gold, Silver and Copper too have risen well and could test 1880, 29.50-30 and 4.80/90 respectively. A break above 1880 in Gold could take it higher towards 1900 else a dip to 1820/1800 could be seen again.
Brent (69.66) and WTI (66.48) have risen well on weakness in the Dollar Index (see forex section below). Nearing the immediate resistance at $70 and $67 respectively, we need to see if the prices manage to break higher of fall back from there again towards $65 and $62. Any break above $70 on Brent would take it higher towards $72-75 while if WTI breaks above $67, it could head towards $70. Watch price action near current levels today.
Gold (1872.60) has broken above 1860 mentioned yesterday and now has immediate resistance at 1880 which if holds can drag Gold down to 1800 in the near term before the rally towards 1900 starts again. Watch price action near 1880.
Silver (28.69) has risen well as expected and broke above our target of 28.50. If the rally continues, we may expect a rise to 29.50-30 in the near term.
Copper (4.7510) has risen and while above support at 460, we may expect a rise to 4.80/90 in the medium term.
FOREX
Dollar Index has fallen and needs to break below 90-89.50/30 in order to indicate further bearishness in the longer run. Euro may test 1.22 while EURJPY is headed towards 135. Aussie and Pound seem to be moving higher and could continue so for the next few sessions. Dollar-Yen can remain within 109-110 range for some more time. USDCNY has been falling and needs to stop at support levels of 6.42/40 to bounce back else could be vulnerable to medium term bearishness. USDINR has scope to test 73 while below 73.25. Upside could be limited to 73.40 in the near term.
Dollar Index (90.11) has dipped further and could test 90-89.50 in the near term from where a bounce can be expected towards 91. Failure to hold above 89.50 would make the index vulnerable to a sharp fall towards 88-86 in the longer run indicating bearishness. Watch price action near immediate support levels.
Euro (1.2164) has tried to rise again after seeing a balanced movement within . 1.2126-1.2170 yesterday. An immediate rise to 1.22 looks likely just now which then needs to break higher to move up further.
EURJPY (132.81) has moved up a bit and could rise towards 135 steadily.
Dollar-Yen (109.17) has dipped a bit but overall looks stable. A bounce from 109 can be possible in the near term. If the Dollar Index breaks below 109, we may well see a test of 108 in the medium term.
Aussie (0.7787) has bounced well over the last few sessions and can attempt to test 0.7815-0.7820 in the near term. A break above this would be needed for the Aussie to move up further towards 0.7850 or higher.
Pound (1.4169) is heading towards 1.42 and a dip from there towards 1.40-1.39 looks possible before rising back again to higher levels.
USDCNY (6.4330) continues to fall but could pause at 6.42/40 and attempt to bounce back from there. Note that 6.40/42 is an important long term support which if breaks could make the pair vulnerable to a sharp fall in the longer run. Watch price action near 6.42/40.
USDINR (73.2150) has scope for a test of 73.00 while below 73.25. Any bounce seen from current levels may test 73.30/40 on the upside. Note 73.40 is an immediate resistance on the upside.
INTEREST RATES
The US Treasury yields remain stable and look mixed in the near-term. As mentioned yesterday, the Treasury yields can oscillate in a broad range for some time. German yields continue to inch up and are keeping our bullish view intact. The 10Yr GoI fell sharply yesterday and can resume the downtrend on a break below 5.95% from here. That in turn will negate the chances of a corrective rise that we were earlier looking for.
The US 2Yr (0.15%), 5Yr (0.83%), 10Yr (1.64%) and 30Yr (2.36%) Treasury yields remain stable after having fallen sharply on Friday. Our view remains the same. 1.7% (10Yr) and 2.4% (30Yr) are the intermediate resistances that have to be broken to move further up to 1.8% (10Yr) and 2.5% (30Yr). While these resistances hold, the yields can gradually dip to 1.5%-1.45% (10Yr) and 2.2%-1.15% (30Yr) once again in the coming days.
The German 2Yr (-0.67%), 5Yr (-0.51), 10Yr (-0.12%) and the 30Yr (0.44%) yields are inching up in line with our expectation and keep the bullish outlook intact. The yields can rise to 0% (10Yr) and 0.55% (30Yr). Important supports are at -0.20% (10Yr) and 0.35% (30Yr).
The 10Yr GoI (5.9723%) has come-off sharply below 6% contrary to our expectation to see a corrective rise to 6.04%-6.06%. Immediate support is at 5.95% (revised lower from 5.96% mentioned in the Evening Comments yesterday). A break below it will negate chances of the corrective rise and can drag the yield lower to 5.9% – the fall that we have been expecting for a long time.
